According to a new report from IHS Markit, price-drops and slower hardware sales resulted in console hardware spending falling to $10.5 billion from $12.8 billion year-over-year.

Software sales helped offset that decline to an extent, with shoppers splashing out $21.5 billion on physical and digital content -- a year-over-year rise of 5.6 percent.

Consumer spending on console platform subscriptions, such as Sony's PlayStation Network online service, also reached record levels of $2.8 billion, acting as another minor salve.

Speaking of Sony, the report shows that the PlayStation creator is dominating the console market, and currently hold a 57 percent market share in terms of consumer spending.

As the graph below shows, Nintendo and Microsoft are playing catch-up with Sony, although both companies are expected to witness a positive turnaround in 2017 thanks to the launch of the Nintendo Switch and Project Scorpio.

Looking ahead, IHS Markit is anticipating a rebound in 2017, and believes the console market will grow by 4.1 percent to $36.2 billion over the next year. The Nintendo Switch and rising digital sales are expected to drive that turnaround.